If you are selling a home this spring, knocking $1,000 off your list price might net you thousands of dollars more at the closing table. If you are buying, adding $1,000 to your offer could help you beat rival bids.
And if you want to boost your chances of selling your home above its list price, hire an experienced agent.
Those are among the home-sales hacks discovered by housing economists Michael Seiler and Bennie Waller and reported in peer-reviewed research published in academic journals. Their work, conducted separately, gives a glimpse into the quirks of human behavior in housing markets.
Seiler, a professor of real estate and finance at the College of William & Mary in Williamsburg, Va., and Waller, a professor of finance and real estate at Longwood University in Farmersville, Va., are among a cadre of researchers looking for quirks in the way consumers buy and sell homes. "Buyers and sellers are not always rational," Waller said.
Tip 1: Use "just-below" pricing. There's a reason retailers price items at $99 rather than $100: The first digit in the price has a strong influence on a potential buyer's mind-set.
Knocking a list price down from $300,000 to $299,000, or from $200,000 to $199,000, ultimately yields a premium of 2.5 to 3% when the home sells, Seiler said.
However, he said, cutting the price from $250,000 to $249,000 won't net more. "It's the left-most digit that really matters," Seiler said.
"People can see the difference is only $1,000," Seiler said. "Even though in the short term, your brain knows exactly what you're talking about, later, the one that's priced just slightly higher seems much higher."
For buyers in bidding wars, the concept works in reverse. To make your bid stand out, offer $300,000 instead of $299,000.
Tip 2: Hire an experienced agent. Agents in Waller's study had been in the business for 13 years on average, and veterans were more likely to sell above list price than rookies. "Experienced agents aren't going to take a property that's overpriced," Waller said. "It's a waste of time, and it hurts their reputational capital."
Tip 3: Agent comments matter. Waller found that the number of comments written by the agent when describing the listing affects whether it sells for a premium. The more comments, the better.
However, offering cash bonuses or more generous commissions to agents who secure buyers doesn't seem to matter in terms of generating premium prices.